Question

Tempo Company's fixed budget (based on sales of 18,000 units) for the first quarter of calendar year 2017 reveals the following.

	Fixed Budget
Sales (18,000 units)						$	3,816,000
Cost of goods sold
Direct materials		$	432,000
Direct labor			792,000
Production supplies			468,000
Plant manager salary			232,000				1,924,000
Gross profit							1,892,000
Selling expenses
Sales commissions			144,000
Packaging			288,000
Advertising			100,000				532,000
Administrative expenses
Administrative salaries			282,000
Depreciation—office equip.			252,000
Insurance			222,000
Office rent			232,000				988,000
Income from operations						$	372,000

Complete the following flexible budgets for sales volumes of 16,000, 18,000, and 20,000 units. (Round cost per unit to 2 decimal places.)

For quarter ended march 31, 2017

Flexible budget

flexible budget at

	Variable amount per unit	Total fixed cost	16,000 Units	18,000 units	20,000 units
Sales
Direct materials
Direct labor
Production supplies
Sales commissions
packaging
TOTAL variable costs
Contribution margin
Fixed costs
plant manager salary
Advertising
Administrative Salaries
Depreciation- office equip
insurance
office rent
Total Fixed costs
Income from operations

Answer 1

	Variable Amount per unit	Total Fixed Cost	Unit sales of 16000	Unit sales of 18000	Unit sales of 20000
Sales	$              212		$     3,392,000	$ 3,816,000	$ 4,240,000
Variable Costs
Direct Material	$                24		$        384,000	$     432,000	$     480,000
Direct Labor	$                44		$        704,000	$     792,000	$     880,000
Production Supplies	$                26		$        416,000	$     468,000	$     520,000
Sales Commission	$                   8		$        128,000	$     144,000	$     160,000
Packaging	$                16		$        256,000	$     288,000	$     320,000
Total Variable Costs	$              118		$     1,888,000	$ 2,124,000	$ 2,360,000
Contribution Margin	$                94		$     1,504,000	$ 1,692,000	$ 1,880,000
Fixed Costs
Plant manager salary		$          232,000	$        232,000	$     232,000	$     232,000
Advertising Expense		$          100,000	$        100,000	$     100,000	$     100,000
Administrative Salaries		$          282,000	$        282,000	$     282,000	$     282,000
Depreciation		$          252,000	$        252,000	$     252,000	$     252,000
Insurance		$          222,000	$        222,000	$     222,000	$     222,000
Office Rent		$          232,000	$        232,000	$     232,000	$     232,000
Total Fixed Costs		$      1,320,000	$     1,320,000	$ 1,320,000	$ 1,320,000
Income from Operations			$        184,000	$     372,000	$     560,000